Environmental Site Assessments

The information on this web page is intended to provide an overview of environmental site assessments for property owners, purchasers, lenders, local government officials and others. It does not describe technical requirements or legal considerations.

What are Environmental Site Assessments (ESAs) and when are they used?

An ESA, also known as environmental due diligence and All Appropriate Inquiry, is commonly done prior to commercial or industrial property transactions to assess the likelihood of contamination, and the liability for clean-up if contamination is found. ESAs are divided into two phases.

Phase I includes an examination of relevant records, interviews with owners, past owners and neighbors and an inspection of the property in order to identify recognized environmental conditions. Based on the findings of a Phase I, a property owner or other interested party may follow with a Phase II.
Phase II uses the information in the Phase I to select locations for environmental sampling in areas of concern, in order to confirm suspected contamination. Often, initial sampling is completed as part of the Phase II.

An ESA is not a site investigation that evaluates the full extent of contamination, as defined in Chapter NR 716, Wis. Admin. Rules. Rather, Phase I identifies likely areas of contamination and Phase II helps to verify whether or not there is any contamination in these areas.

Wisconsin state law does not require that an ESA be performed prior to a property transaction. However, if contamination is confirmed by Phase II sampling, state law (s. 292.11, WI Stats.) requires that the responsible party report it to DNR immediately. DNR will evaluate the sampling results and will usually require more detailed sampling and analysis of the contaminated area, called a site investigation. Please see our Spills web page for more information about reporting contamination. For more information about full site investigations, please see our Cleanup Overview web page.

ESAs are used in many situations, most commonly during property transactions such as these:

a seller wants to reassure potential purchasers about the environmental condition of a property, or a purchaser requests this type of information;
a lender wants to qualify for a state liability exemption;
a potential purchaser wants to qualify for the federal Superfund liability defense for “bona fide prospective purchasers”. Note: there is no equivalent defense under Wisconsin law. However, local governments and others may have a statutory exemption from environmental liability under certain circumstances. Please see our Liability Overview web page for more information;
a local government plans to purchase a brownfield property and needs to conduct All Appropriate Inquiry in order to qualify for a federal brownfields grant or DNR Ready for Reuse grant or loan; or
a local government has received an EPA brownfield assessment grant and needs to comply with the terms and conditions for All Appropriate Inquiry when assessing various properties.

For the situations described above, no DNR review of the Phase I and Phase II reports is required. However, the person who owns the property or who caused the contamination (both are liable) must immediately report any contamination that is identified to DNR. In addition, a person that is interested in purchase of a property may elect to have DNR review a Phase I, Phase II, or both in order to determine whether additional environmental work will be required. An interested purchaser may submit Phase I and Phase II reports to DNR and request a general liability clarification letter, which requires a $500 review fee. For more information about these letters, please see Fact Sheet 11: General Liability Clarification Letters (RR-619) [PDF, 141KB].

Standards for Performing ESAs, Qualifications to Conduct ESAs

Wisconsin has no requirements to complete an ESA unless someone has elected to enter one of the four state programs listed below. Others who want to qualify for a federal Superfund liability defense should see item five (5).

1. Voluntary Party Liability Exemptions (VPLEs)

This option is for those who want a DNR Certificate of Completion that limits future liability for a completed cleanup, and also applies to subsequent property owners. Phase I and II ESAs are required for the VPLE program.

Standards for this ESA

Those who wish to enter the VPLE Program must complete Phase I and II assessments as defined in Chapter NR 750, Wis. Admin. Code. Following federal All Appropriate Inquiry procedures will also meet these requirements:

“Phase I environmental assessment” means an assessment of a site to identify potential or known areas of environmental contamination. This assessment may include, but is not limited to, reviewing records, interviewing persons, and conducting physical inspections of the site.
“Phase II environmental assessment” means an assessment of a site to physically confirm that contamination exists in potential or known areas of environmental contamination identified in the Phase I environmental assessment, but not to determine the nature, degree and extent of contamination. This assessment may include, but is not limited to, field sampling of media, laboratory analysis of samples and visual confirmation of environmental contamination at the site.

Qualifications to Conduct this ESA

No state requirements.

2. Applications for DNR’s Wisconsin Brownfield Insurance Program

The Wisconsin Brownfields Insurance Program (WBIP) is an optional insurance program that helps protect against unknown environmental liabilities for property owners, developers, businesses and local governments. Entry into the program requires Phase I and II ESAs.

Standards for this ESA

No state requirements; federal All Appropriate Inquiry procedures are recommended.

Qualifications to Conduct this ESA

No state requirements.

3. Applications for certain DNR brownfield grants & loans

DNR requires that applicants for Green Space and Public Facilities Grants, as well as for federally funded Ready for Reuse grants and no-interest loans, have completed Phase I and II ESAs.

Standards for this ESA

Federal All Appropriate Inquiry requirements apply to Ready for Reuse.

Qualifications to Conduct this ESA

Federal All Appropriate Inquiry requirements apply to Ready for Reuse.

4. Lender Liability Exemptions

Lender Liability Exemptions for normal lending, acquiring property through foreclosure, inspecting property, enforcing a security interest in personal property and fixtures, and acting as a representative are available under s. 292.21, Wis. Stats.

Standards for this ESA

Lenders who wish to qualify under s. 292.21, Wis. Stats. must meet the requirements of s. 292.21 (1)(c)2. Their ESA must be completed within 90 days of acquiring the property, be submitted to DNR within 180 days of acquiring title and include the following elements, summarized here.

visual inspection of the real property and description of personal property;
ownership and use of the property based on title records for the last 80 years;
historic and recent aerial photographs;
relevant environmental licenses, permits or orders;
results of any environmental sampling and analysis; and
determination whether the property is on lists or in data systems of known or potential threats to human health or the environment, including US EPA’s database at cfpub.epa.gov/supercpad/cursites/srchsites.cfm and DNR’s data systems at dnr.wi.gov/org/aw/rr/clean.htm;

Following federal All Appropriate Inquiry procedures should help meet the above requirements, as long as the above state requirements are also met.

Qualifications to Conduct this ESA

No state requirements.

5. Bona Fide Prospective Purchaser

A fifth situation applies to anyone seeking a Bona Fide Prospective Purchaser liability defense under Superfund. In this case you must meet the All Appropriate Inquiry requirements. AAI must be completed or updated within one year prior to the date of purchase.

Situations when ESAs are Beneficial

In the situations listed below, ESAs are not required but are generally beneficial for clarifying the environmental situation. DNR suggests that most people conducting ESAs in Wisconsin follow the federal AAI standard. This ensures a comprehensive assessment, and lenders and potential purchasers may prefer or require this.

Liability clarification letters [PDF, 141KB] with DNR’s opinion regarding a person’s liability for investigation and cleanup of environmental contamination.
Lease liability clarification letters [PDF, 143KB] that clarify for lessees whether DNR would consider them liable for existing contamination on a leased property.
Off-site liability exemptions for persons who can demonstrate that their property has been contaminated by substances that originated on a different property.
Property tax cancellation or reassignment of foreclosure judgment for situations where counties (and the City of Milwaukee) and interested private parties ask DNR to approve a cleanup agreement, and in exchange the county changes the tax liability or ownership of a tax-delinquent property.
Changes to unlicensed waste disposal sites, in order to obtain approval to alter conditions at unlicensed landfills, typically for new construction.

If a Phase II ESA identifies contamination and DNR then requires a full investigation of the type and extent of contamination, Chapter NR 712, Wis. Admin. Code [exit DNR] establishes qualifications for environmental professionals undertaking the full site investigation.

For more information on this topic, please contact:

Laurie Egre
608.267.7560

Last Revised: Wednesday September 02 2009